I accidentally overpaid into my ISAs...

Loz95

I made a silly mistake recently. When setting up a new account, i accidentally withdrew money from a Cash ISA and put it back in again without realising that this would be classed as 'new money'. If adding this to the monthly installments i've been paying into the Cash ISA concerned and a separate help to buy ISA, i've now gone over the ISA limit for the tax year. I fear that i'll be taxed on the amount even though this was a mistake! I read online that i should call HMRC and explain it was a mistake, but they weren't particularly helpful. They just told me to call my bank, who in turn told me to call HMRC! 

Does anyone know if anything can be done to sort this?

Thanks in advance. 

eskbanker

Which specific products have you been paying into?  You may be OK if the non-HTB one is a flexible ISA, but if they're with different institutions then that would be another issue....

Hoenir

Withdrawing the overpayment would be a proactive start. Unlikely any action will be taken until after the end of the tax year. When all the facts will be known. 

eskbanker

Hoenir said:

Withdrawing the overpayment would be a proactive start. Unlikely any action will be taken until after the end of the tax year. When all the facts will be known. 

If the non-HTB ISA is flexible then withdrawing the overpayment is unnecessary as there won't have been any rule breach.

If the non-HTB ISA isn't flexible, withdrawing the overpayment doesn't actually correct the breach and is unlikely to be beneficial anyway if this is a first 'offence', as HMRC anecdotally just give a warning rather than taking any punitive action.

masonic

Loz95 said:

I made a silly mistake recently. When setting up a new account, i accidentally withdrew money from a Cash ISA and put it back in again without realising that this would be classed as 'new money'. If adding this to the monthly installments i've been paying into the Cash ISA concerned and a separate help to buy ISA, i've now gone over the ISA limit for the tax year. I fear that i'll be taxed on the amount even though this was a mistake! I read online that i should call HMRC and explain it was a mistake, but they weren't particularly helpful. They just told me to call my bank, who in turn told me to call HMRC! 

Does anyone know if anything can be done to sort this?

Thanks in advance. 

If you have been making monthly payments into both the cash ISA concerned and a separate HTB ISA, then the only way this is permitted under the current rules is if it is a split-ISA arrangement with both products being held with a single provider. If so, the provider is not permitted to allow you to exceed the annual allowance, so they must take action if at any stage you try to pay in too much. It would be helpful if you named the cash ISA product and confirmed with which provider you hold each ISA, as possibilities could range from, you never exceeded the ISA limit and all is well, to, you weren't entitled to pay into one of these ISAs at all in this tax year.